How do actuarial and data science skills converge at insurers?
The roles of actuaries and data scientists
This report, which is available in life and non-life versions, provides a summary of our observations on what insurers’ analytics function will look like in the future, the challenges carriers are currently facing to make this transition, and how they can address them. We base our observations on our experience serving a large portion of US carriers. We supplemented our findings through conversations with executives at a representative sample of these carriers, including life, commercial P&C, health and specialty risk.
We also specifically address the issue of recruitment and retention of data scientists within the confines of the traditional insurance company structure.
Our survey of leading insurers shows that carriers are increasingly looking to integrate data scientists into their organizations. This is one of the most compelling and natural opportunities within the analytics function.
PwC sees three main ways to accelerate integration and improve combined value:
- Define and implement a combined operating model
Clearly defining where data scientists fit within your organizational structure and how they will interact with actuaries and other key functions will reduce friction with traditional roles, enhance change management and enable clearer delineation of duties. In our view, developing a combined analytics center of excellence is the most effective structure to maximize analytics’ value.
- Develop a career path and hiring strategy for data scientists
The demand for advanced analytical capabilities currently far eclipses the supply of available data scientists. Having a clearly defined career path is the only way for carriers to attract and retain top data science (and actuarial) talent into an industry that is considered less cutting edge than many others. Carriers should consider the potential structure their future workforce, where to locate the analytics function to ensure adequate talent is locally available, and/or consider remote working arrangements.
- Encourage cross-training and cross-pollination of skills
As big data continues to drive change in the industry, actuaries and data scientists will need to step into each other’s shoes in order to keep pace with analytical demands. Enabling knowledge sharing will reduce dependency on certain key individuals and allow insurers to better pivot towards analytical needs. It is essential that senior leadership make appropriate training and knowledge sharing resources available to the analytics function.
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